August 13, 2016

MS. KRIS ANNE GREGORIO

San Miguel Foods, Inc., BMEG Sales Office
Luna St., Lapaz
5000, Iloilo City Philippines

Subject: Opinion on Proposal of the Accused to

Enter a Compromise Agreement
Reference: Crim. Case No. S 288-88 to S 299-99 entitled
PP vs. Danny Uy

Dear Ms. Gregorio:

In behalf of the LAW FIRM OF NAVA, FUERTE, GOLEZ, & LISING, I am imparting
to you my legal opinion regarding the proposal of Accused Danny Uy to have his
case settled by way of compromise.

It can be reckoned during the mediation proceedings, Mr. Uy, in order to have his
case amicably settled, proposed the following:

 To pay his outstanding obligation with SMFI carrying with it an interest of

six percent (6%) per annum; and
 To be refunded of his paid franchise fee of One Hundred Twelve Thousand
Pesos (PhP112,000.00) for the SMFI Chicken Station Franchise.

As for the proposed reduced interest rate of six percent (6%) per annum, this is
allowed and even mandated by the Bangko Sentral Ng Pilipinas by virtue of BSP
Memorandum Circular No. 799 which states that:

“Section 1. The rate of interest for the loan or forbearance of any

money, goods or credits and the rate allowed in judgments, in the
absence of an express contract as to such rate of interest, shall be
six percent (6%) per annum. xxx”

Since the contract entered with Mr. Bedonia bore no mention of any interest, the
applicable legal interest then is six percent (6%) per annum.

As to the issue of the franchise, the franchise agreement entered by SMFI with Mr.
Bedonia stipulated that it would be SMFI who shall supply the products to Mr.
Bedonia. However, the supply was subcontracted to a subdealer and that it was
this subdealer who actually supply the agreed products to Mr. Bedonia and not
SMFI itself. From the foregoing, SMFI appeared to have committed a breach in its
franchise contract with Mr. Bedonia. Such breach caused Mr. Bedonia to procure
the products at a much higher price from the subdealer which price is different
from what was stipulated in the franchise contract. Hence, in view of the breach
of SMFI, it is only just that the franchise fee be refunded to Mr. Bedonia.

May this enlighten you in the eventual amicable settlement of the case at hand.
Should you have any other inquiries, please do not hesitate to contact me. Thank
you.

Sincerely yours,

ATTY. ALVI SHANE FUERTE NAVA

Counsel